WorkCover Reforms for the fundamentally broken scheme


Posted By and on 25/05/23 at 9:10 AM

The Andrews Government has announced significant reforms to the WorkCover scheme in Victoria it says will restore the financial sustainability of the scheme and meet the demands of modern workforces.

The three key reforms that employers should be aware of are:

  1. The average premium rate will increase to 1.8% of remuneration;
  2. Adjustments to the eligibility criteria for mental injury claims and weekly benefits for claims lasting longer than two and a half years; and
  3. The establishment of Return to Work Victoria.

Further details on these reforms are set out below.


In 2022, Victoria’s WorkCover scheme saw its claims liability exceeding premium revenue by $1.1 billion. In 2023-24, the target average premium rate will increase by 42% – from 1.27% to 1.8%. This increase will be effective from 1 July 2023.

The Andrews Government is hopeful that the increase in premium rate will assist to close the gap between the premiums paid and the cost of claims which has continued to threaten the long-term financial viability of the WorkCover scheme.

Employers should receive their premium renewal notice in July. While most employers should expect to see a rise in their premium, not all employer premiums will rise by the same amount. This variation is due to discrepancies in their sector, industry risk profile, size and workers compensation claims experience.


Mental injury claims

There has been a sharp rise in mental injury claims in recent years. Mental health claims currently represent approximately 16% of all claims and are increasing each year by approximately 3.5%.

When the change is implemented, workers suffering from burnout or stress will no longer have access to weekly workers’ compensation payments. Instead, these workers will have access to provisional payments for 13 weeks to cover medical treatment and enhanced psychosocial supports to help them return to the workplace or training pathways.

Bullying, harassment, and traumatic event PTSD injuries will remain on the WorkCover scheme

Claims lasting longer than two and a half years

The number of long-term claims (where a worker is unable to return to work for longer than 130 weeks) has almost doubled since June 2016. An increasing number of workers are remaining on the WorkCover scheme long-term.

In response, WorkSafe will alter the test for people who have been receiving weekly benefits for 130 weeks. Injured workers will only be eligible to receive WorkCover payments beyond two and a half years if assessed as having a whole person impairment of 20%, alongside the work capacity test.

The above eligibility changes will require new legislation which the Andrews Government plans to introduce later in 2023 and to come into effect in 2024, and operate prospectively.


The creation of Return to Work Victoria is intended to support injured workers with pathways toward suitable work, including training and job placement incentives.

The Andrews Government anticipates that the agency will work in partnership with worker and employer groups, mental health and occupational health experts to pilot prevention, early intervention and return to work programs and help injured workers and those suffering from work-related mental stress to return to their jobs or be retrained.

Return to Work Victoria has not yet been established and will be the subject of further consultation with unions, employers and advocates.

The increase in mental health related injury claims, the length of time workers remain on the WorkCover scheme, and the delays in access to psychiatrists and psychologists in seeking mental health treatment, are clearly placing a strain on the available WorkCover scheme funds. What percentage of the premium will be invested in the new agency and its capacity to provide timely and beneficial support to workers in their recovery and an earlier return to work  is unclear from our research. Let’s see if this is the silver bullet to fix the broken scheme?!

If you have any questions in relation to this article, please don’t hesitate to contact our Workplace Relations & Safety team.

This article was written by Tim Agius (Lawyer) and Gina Capasso (Principal Solicitor). 

Tim Agius Lawyer

Tim is a lawyer in our Workplace Relations & Safety team. Prior to joining us, Tim worked at a boutique employment law firm advising clients across a variety of workers compensation, employment... Read More

Chris Gianatti

Chris Gianatti Director

Chris worked for a number of years with Corrs before moving in-house to Telstra as HR Legal Counsel for the “Factory” (covering Telstra’s back of house operations including the field... Read More